Trade and Environmentally Sustainable Economic Growth By Rae Kwon Chung Director, Environment and Sustainable Development Division, UNESCAP Subregional Workshop on the Trade and Environment Dimensions in the Food and Food Processing Industries in the Pacific Suva, Fiji, 7-8 June 2006

TRADE and ENVIRONMENT SUSTAINABLE DEVELOPMENT TRADE  Main driver of economic growth ENVIRONMENT  Support for economic growth

Can the Asia-Pacific region continue with its current growth pattern ? Is there an alternative path for economic growth without causing damage to the environment ? Asia-Pacific is the fastest growing region in the world

Dynamic growth ESCAP countries %; World % ( ) Industrial output: developing countries - 47 %; Global - 25% ( ) Manufacturing output: developing countries - 51% ( ) Global production centre –exports grew by 94%

Population density 1 ½ times the global average Freshwater available: 3,920m 3 /cap/yr vs. South America 38,300m 3.cap/yr. Productive area available per capita: 60 % of the global average Arable land per capita: 80 % of the global average Limited carrying capacity

> 670 million still living on < US$1 per day > 600 million without safe drinking water 1.9 billion without sanitation 800 million without electricity or access to clean energy Millions still susceptible to diseases and high maternal death rates Unmet basic needs… need for further economic growth

Asia-Pacific situation Unmet basic needs Limited carrying capacity

What are the Implications for the future

Carrying capacity vs. environmental pressure Ecological deficits – already living beyond our “ environmental means ” Global hectares per capita (2002) Eco-logical deficit BiocapacityEcological footprint Asia- Pacific WORLD Non-Asia Pacifc

Rising prices of natural resources (oil, steel, wood products etc.) Growth patterns need to become more resource efficient/eco- efficient Thus, eco- efficiency is a basic condition for future growth Sustaining growth under threat

Sources of pressure Unsustainable growth Declining sustainability from

Growth of pollution & resource–intensive industry Rapid growth is driven by export of labor, resource and pollution intensive manufactured goods Office, computing, and electronics: 206% ( ) Transport eqpt: 78% Chemicals, petroleum etc.: 50.7% Basic metals: 37%

Asia-Pacific region is emerging as a global production center Exports by ESCAP developing countries grew by 122% against global growth rate of only 76% Asian share of FDI is increasing 16% in 2003, 24% in 2004 As pollution remains in the region, exports add additional burden on the limited carrying capacity

Agricultural intensification Agricultural production increased by 62% vs. global production of only 27 % ( ). Fertilizer production and use. Expanding irrigation

China and India - 64% of total regional fertilizer production. Republic of Korea (367kg/ha of agri. land) – highest in the region, followed by Japan (270kg/ha) and China (257kg/ha). In 29 countries, 60% of water is used for agriculture and in 15 countries uses more than 90%. Proportion of irrigated areas expanded 25 times faster than the rest of the world. Energy content of food production has increased Emission of Greenhouse Gases from agriculture is also becoming significant

Declining Sustainability The signs

Declining natural capital Large areas of land in various stages of degradation Shrinking natural forests Water extraction rates unsustainably high Declining biodiversity Marine resources vulnerable

Deteriorating quality of urban environment Urban quality of life is threatened Declining water quality Increasing health threats from air pollution Growing problems in human settlements

Climate change and natural disaster CO 2 emissions: increased 30% in absolute terms ( ) China and India accounting for this growth but on a per capita basis 18 times lower than developed countries. Asia-Pacific accounts for 80% of all natural disasters and some 90% of deaths of the world since 1900.

Sustainable Development Sustained growth Sustainable growth

Grow now, clean up later vs. green growth Current growth pattern must change Leap-frogging is possible Decoupling of economic growth and environmental pressures (SO 2 emission is decreasing) is doable. Relevant to all countries, particularly in Asia and the Pacific

Green growth Maintains or restores environmental quality and ecological integrity Decouples negative environmental impact from economic growth pressures

Key elements of Green Growth: 1) improving eco-efficiency Satisfying unmet needs with less resource and waste. Incorporating environmental costs in socio- economic development planning

Key elements of Green Growth: 2) Creating synergies between economic growth and environmental protection Promoting green business opportunities Environment as an opportunity for growth – not a cost or burden

Vision for Asia-Pacific Satisfying the unmet needs without compromising environmental sustainability through Green Growth Asia Pacific strategy of pursuing sustainable development

Subregional Perspective

The Pacific Narrow and fragile eco-system and resource base Economic growth rates generally slow, but economic activity still exerts high pressure Effects of climate change already having significant impact – Most vulnerable to natural disaster, climate change High pressures from changing land use and urbanization, tourism activity Unsustainable fisheries Wastewater, industrial effluent and hazardous and municipal wastes Limited infrastructure and finances Water and energy security urgent issues Remain the most vulnerable and immediately threatened by climate and land use change processes as well as social change Unique challenges from remote location, size and fragile ecosystem

Importance of food exports in selected Pacific countries CountryTotal exports (m, US$, fob) Contribution of exports to GDP % Share of main food exports % Fiji Sugar 24.9 Fish 9.53 Coconut 0.62 Kiribati Copra Fish 5.47 N/A PNG Agriculture Forestry 6.52 Fish 1.48 Samoa Fish Beer 8.37 Coconut 6.62 Tonga Squash Fish Vanilla 0.33 Vanuatu Copra 6.72 Beef 7.49 Cocoa 1.93 Year 2002, source: ADB

Importance of food exports in selected Pacific countries (2) Country Share of agricultural exports in GDP Share of food exports in total agricultural exports Share of processed food exports in total food exports Fiji PNG Samoa Tonga Vanuatu

Two dimensions of the trade and environment debate affect export competitiveness: 1) Environmental standards developed in export markets are increasingly important non-tariff barriers that determine market access and affect product quality 2) The environment provides the support for the production of goods, in terms of inputs, energy and reception of emissions and waste. Product quality and the overall sustainability of production depend on the management of its environmental impacts

Thank You